Millions of new enrollees are signing up for Medicaid due to its expansion under Obamacare, but many will be shocked to learn that their estates can be held liable for the costs of their healthcare.

As part of the 1993 budget reconciliation bill, Congress required states to implement the Medicaid Estate Recovery Program (MERP) to seek reimbursement of payments for nursing homes and long-term care facilities.

Obamacare, officially known as The Affordable Care Act, greatly expanded the services for which reimbursement can be pursued, and states can now use liens to recover money spent by Medicaid for services beyond long-term care.

States have discretion in how to implement the law, with some seeking to collect nearly all medical expenses.

Yevgeniy Feyman, a fellow at the Manhattan Institute, said the intent of the program was to discourage people from using Medicaid as a free long-term health insurance plan while hiding their assets.

"People who can engage in asset planning are not going to be effected by it, but there is going to be a flood of new people and most are not going to be aware that their estates and heirs could be held liable for their healthcare costs," Feyman told Newsmax.

In October and November, the first two months of Obamacare implementation, nearly 4 million people enrolled in Medicaid, as the new healthcare law eased requirements to qualify for the program.

The Affordable Care Act effectively expanded Medicaid — designed as a program for low-income families — to all U.S. citizens and legal residents with an income below 138 percent of the federal poverty line in states that agreed to go along with the program. But individual states can set a higher threshold.

So far, 26 states and the District of Columbia have expanded their Medicaid programs. But many Republican governors have balked, citing the increased cost once federal aid diminishes.

Some states that expanded the Medicaid program are now trying to backtrack on the reimbursement rules.

In response to consumer outrage, the Washington State Health Care Authority filed an emergency rule to amend Medicaid's estate recovery policy so that only costs related to long-term care can be recovered by Medicaid.

In Wisconsin, the state legislature is considering measures to rescind some or all of the powers it gave the administration of Gov. Scott Walker to recover Medicaid expenses for nursing home or other care.

"It's a very strange setup with regard to long-term care financing because there are a lot of assets that are excluded, so you can be financially well-off and still access the program," said Mark Warshawsky, an adjunct scholar at the American Enterprise Institute and vice chairman of the federal Commission on Long-Term Care.

"In addition, trying to recoup expenses after the fact is very cumbersome for both the government and the consumer," he said.

"Not all states do a good job in pursuing repayment of costs and many are not quick to do it when they do enforce [MERP]. There is a great variation in the seriousness with which each state takes the program," Warshawsky told Newsmax.

Warshawsky said the ability of states to make adjustments to how MERP is applied within jurisdictions reflects the sheer arbitrariness and inequity of the program and of Obamacare in general.

"There are so many areas in the ACA that merit re-examination and adjustment that at some point you have to ask whether it makes more sense to just start over. There are so many areas and this is just one small area that exposes the fault lines in the law," Warshawsky said.

He examined Medicaid's asset-exclusion limits and concluded they have opened the door to abuse by permitting individuals with generous liquid assets to qualify for Medicaid.

"Significant long-term care benefits flow to individuals in the top 20 percent of retirement earnings, enabled by Medicaid's generous asset-exclusion limits," he wrote in the Wall Street Journal. "In many states, an elderly person may own a home valued at $802,000, plus home furnishings, jewelry, and an automobile of uncapped value while receiving long-term Medicaid support.

"In addition, they are allowed to have various life-insurance policies, retirement accounts with unlimited assets, $115,920 in assets for a spouse, income from Social Security, and a defined-benefit pension plan."

While the Department of Health and Human Services is required to perform annual examinations of how effective states are in recouping reimbursements from wealthy individuals, he noted that the most recent report was from 2005.

He added: "I would question where the oversight is. American taxpayers deserve to know how this program is being conducted and whether or not it is effective."